it was being sent back for repair. now it will probably have to be replaced. u.p.s. issuing this statement. u.p.s. drivers are trained to handle every package with care. we're investigating the issue and will take corrective action with the driver. blah. >> we believe you. make sure you join us tomorrow. "squawk on the street" is coming up next. ♪ good morning. welcome to "squawk on the street." i'm david faber along with jim cramer. we are live from the new york stock exchange. yes, we are. carl continuing to be on assignment. let's take a look at futures this morning as we're a half hour away from open. what do you want to call that, jim? i call it a mixed bag. >> yeah, mixed. mix mixed is good. you haven't mentioned fed yet. >> how about the ten-year note yield? i'll start there.

2.293. yes, this was the year when we were going to go higher in yield. no, it's not. >> spain, 2.1. >> yes, spain is 2.1. i like to go through all of those. and germany, 0.88. all right. crude oil, which has been the key to this market, according to my buddy next to me here, the key. you can see right there we are above 80 on wti. we breached it earlier in the week. we're below it for a bit. 82.48 right now. >> when goldman said it should go lower, they took it lower. now it's bounced back. >> that was the buy signal. let's get to our road map this morning as well. it starts with those markets, starting from a position of strength ahead of the fed statement today. widely expected to detail an end to current bond buying, otherwise known as qe. facebook is lower in the premarket on declining revenue and growing expense worries. not declining revenue. . >> no, revenues were fabulous. guidance, the guidance. >> declining revenue is

impossible at facebook. if they had declining revenue, that stock would be down 40%. all right. we're going to tell you what mark zuckerberg had to say in his company's defense. again, an example if you put it in front of me, i will read it. >> the greatest growth company of our time, other than alibaba. >> and maybe google. we tossed the idea out there yesterday. now it is a reality. chris veeboker out as ceo. >> what? he didn't want to be fired, david. >> he did not want to be fired. that may have actually been why he was fired. all right. >> one of the nicest guys i've ever had on "mad money." >> not anymore. fed policymakers are set to wrap up their two-day meeting hours from now and issue a statement at 2:00 p.m. eastern widely expected to announce an end to their bond-buying program. investors will also keep an eye out for clues about a possible timeline for interest rate hikes. this all on the day after a stock market rally that put the

s&p 500 within 15 points of 2,000 and the dow is now back above 17,000. so much for that volatility. here we are again. the fed is not unimportant. that balance sheet is quite large. it is not as though they're going to start selling down. they're simply going to stop buying. >> what a shame they're not selling. boy, we could use a little inflection in the curve. it would help a lot of savers. it would do great for the people who constantly say the fed is a bunch of knuckleheads. it would solve a lot of our problems, but they won't do it. >> they won't do it. the question is, are we going to get anything today that we don't expect? you know, there's focus on considerable time being eliminated, but that may be the next meeting. i guess what's the december meeting before year end. >> i think this is a parlor game we have been playing for years. the parlor game has made you no money, so i have let other people play. i play sorry. i play clue. i play battleship. i let other people play fed. these are all equal ly -- they

don't mean anything. the data, david, not so hot. >> not so hot, although not so bad. if you're looking at employment and where we are with the unemployment rate in this country, one has to wonder your we still have 0% interest rates. >> i looked at durable goods. it's not a made-up number. that wasn't so good. retailers are telling me that october is not such a great month, but it was also quite warm. seasonal does seem -- the seasons haven't changed yet. we had superstorm sandy two years ago. there's good and there's bad. employment is good. i know the hedge fund community wants rates to be at 4% so bonds get killed and stocks get killed. right now the fed -- at the fed meetings, there were messengers there from cleveland. do you sit there and say, we got to crush this market? another guy says, i don't know, they're long this market. they don't care about how the

hedge funds are positioned. they're thinking about the american worker and business. >> so they're the ones. >> they're the ones. because nobody else in washington does. best government money can buy except for them. they can't be bought. the fed has not been able to be bought so far. >> so far. they have a lot of gold in that building right up the street. talk about a lot of gold, they made it, facebook. shares are down sharply in the premarket despite what was better than expected quarterly results. mobile counts for two-thirds of this company's ad revenue. that started about a year ago. the social network says it sees revenue growth slowing this quarter, adding it does plan to ramp up spending in 2015. facebook ceo mark zuckerberg addressing the spending last night on the conference call. >> one thing that i'm particularly pleased about is that while we're investing aggressively and making progress towards our big long-term goals,

we also continue to execute well against our near-term priorities. >> that's not a good quote. the best quote in the whole thing was when he said, over a five-year time frame, we have a number of services which we think are well on their way to reaching 1 billion people. once we get to that scale, then we think they will start to become meaningful businesses in their own right. here's what you have. you have one guy with a five-year plan. it's about to grow revenues. let's contrast that with ibm. a five-year plan to buy back stock. the market wants somewhere in between. it doesn't want a five-year plan where you're spending a fortune, giving away 100 million shares to whatsapp. i will look at the facebook call -- and i told people sell some stock ahead of this quarter because they're going to do this. a lot of stock is going to come to market. in the end, people are going to come back to facebook.

split the different stock is the one everyone hated two weeks ago. google. sells at 14 times earnings, fantastic balance sheet. they have much more financial discipline than facebook. just they are not as articulate. >> google has much more financial discipline? >> the whatsapp deal, until they figure out a way to monetize it, just blew up financially. >> as you point out, stock is going to be coming to the market now -- the lockup has expired. >> free to trade. >> that's why perhaps they did give us revenue guidance for the first quarter. although, they bracketed it. that is worrying people. >> historically, they've been very conservative. i think when the smoke clears, this stock is a buy. yesterday i took a lot of heat for my comments on twitter, saying why are you short twitter? these stocks, twitter, facebook, google, in the end you're stuck with them if you're an

advertiser. >> but your point on twitter had to do with execution. you questioned the ceo. you're not at all -- you've never done that on google and/or facebook. >> i think facebook has a five-year plan and i like it. you have to trust zuckerberg. >> same way you have to trust sergei and larry. >> and i totally trust them. i just do not have that same level of confidence. i am being such a diplomat here. this lowers your blood pressure. i was aghast. i think of these three franchises, twitter in many ways has the most room to grow. yet, it had the worth growth. >> and it's interesting, of the three franchises, it is the one company that's not controlled. of course, google is. facebook is. alibaba is, more or less.

>> when i posed the idea that yahoo! could buy twitter, neither that nor the idea that coslo could be replaced was sniffed at. yahoo! by the way, has so much money after what's happened with alibaba. they could buy netflix and twitter. they will not do either of those. >> no, although yahoo! yesterday hitting a high it had not seen since september of 2000 with alibaba reaching a market capitalization e waqual to that walmart, which it was close to on day one of trading. >> marissa mayer doesn't know what she's doing. gives you a triple on your stock. dan more than doubled his money. she bought it all. the stock is up huge from that. then again, she doesn't know what she's doing, right? don't we have to caveat that? >> i want to circle back to facebook before we move on. they're coming up to a quarter where mobile had then surged. the comps are going to be somewhat difficult because we already saw the surge in mobile from that year ago quarter.

they've got some head winds from the euro, no doubt about that. they talked about that a bit on the call. and you've got this bracketed revenue guidance. you only have no eps guidance. they've never given that to you. in fact, it's the first time they've given us any real guidance at all. >> i was looking for 250 next year. now i'm kind of screwed up. >> and they are going to spend an awful lot of money and more than had been anticipated. >> it's not -- the stock deserves to be down. it deserves to be down because they ramped up the expenses dramatically. they're issuing a lot of stock. at the same time, they gave you revenue guidance that was not as good as we wanted. however, all that said, this is an amazing company. it's doing incredibly well. execution is superb. i happen to believe when the smoke clears, we're going to think everything they guided was conservative. >> i mean, this project atlas they talked abouted a bit -- >> people shrugged about that. >> now i hear from people about it. cookieless way of trading --

tracking people across devices, tracking it relationships, and it will be very competitive in monetizing display on others' platforms. that to me is a google. straight across. >> instagram, google. there's a lot of anti-google stuff in this conference call. it's subtle. they're very subtle. zuckerberg comes in. he's big think. then sandberg is kind of harrison ford, so to speak. going back to "star wars." >> got it. i'm there. >> the new cfo, just buzz kill. just giving all that stock away. you set the expectations low. people come in, maybe they do a big secondary. stock at 68. come in and buy the stock, then you sit back and watch it go higher. >> sit back for one moment, because i think we have phil lebeau on the phone about some

news about a fiat chrysler. phil, what's going on? >> thank you, david. fiat-chrysler's board has decided it will be spinning off ferrari, offering 10% to the public in an ipo. the remaining 90% will be issued to shareholders of fiat chrysler. at the same time, they'll be offering another 100 million shares to the public as they are clearly trying to raise capital here. this brings up two questions. first of all, why spin off ferrari now? if you are the fiat board, you're looking at ferrari saying this is our most valuable asset that we can spin off to raise capital so that we have, a, enough capital for our own investments over the next five years, and also to further invest and expand into asia, which is their weakest spot. also, when you look at ferrari, it is not the brand they believe they're going to push on a global basis when it comes to

the upscale market. that is maserati. when you agree with that strategy or not, that's long been the approach. but again, ferrari being spun off by fiat chrysler, 10% in an ipo. the remaining 90% will be issued to shareholders. >> wow. phil, any idea what ferrari is conceivably worth? does that make sense as a stand alone public entity? >> well, it's a more crowded space. let me take the second question first, which is can they compete as a stand-alone entity? yes, they can. they have enough of a certain niche within that upscale market that they can exist as a standalone entity. it's going to be more difficult, but they can sustain themselves. the first question, in terms of how much you're going to get for ferrari for that 10%, at least a couple billion dollars minimum is what you're looking at.

remember, while it's incredibly valuable, it's a low volume manufacturing auto. what you're looking at is their global sales are capped. i'd have to look at the number. i think it's like 7500. there's a limited number there. but it is highly valuable. there will be people who will look for these shares once it's spun off. >> right. all right, phil. we'll be following this story. thank you, phil lebeau. >> that's quite a story. >> still trying to understand. again, phil said 90% would be given to shareholders. so you're an existing shareholder, you get a stake in new, so to speak. then 10% sold to create the market value for it. it's not clear to me what ferrari's market value would be. it wouldn't be 20 billion. >> it's a hand-built car company. i mean, obviously the cream of the crop car. >> i would bet the margins are pretty good. >> i think so. at the same time, i would want a stake in jeep.

>> that you can just buy. we're going to talk buffalo wild wings, posting upbeat earnings and sales. ceo sally smith joins us live and first on cnbc. also ahead, the next chapter in blackberry's turnaround plan. an exclusive interview with the ceo coming up. we're also going to talk about another ceo exit. more "squawk on the street" coming up.

a change at the top of san fi. chris viehbacher is out as ceo of the french drug maker. the chairman will serve as interim ceo while the company searches for a successor. viehbacher sought to dismiss speculation about his future. in fact, we discussed the situation during yesterday's show. >> don't you think this is a little embarrassing? i like christ viehbacher. he's been on the show very much. the don't fire me approach has this, well, maybe i shouldn't buy that stock. >> i get when you get to the point of asking not to be fired, you're probably going to be. >> it's like geno smith, intercepted repeatedly. >> we'll see if that prediction came true. by the way, yesterday the stock

suffered, of course, but of competition in the diabetes franchise particularly and this concern he would conceivably lose his job, which they followed through and did fire him. >> it does have a hewlett-packard feel to it. who wants that job now? who wants that ceo job, david? >> i don't know. i can tell you a search has been going on for a while. >> while he was the ceo, they did a behind-his-back search? >> they had already undertaken a search. to those who would say it had to do with his effort to potentially close down factories in france, i hear no. >> they were smiling in his face. >> it was performance issues, promises that were not met, and his attempt to split the board seemed to unify them. in other words, by saying don't fire me and thinking you've got some of the board that doesn't want to fire you and others that do, they all get together and say you're fired. >> he came in, the stock was at 28. went to 48. does have a good yield. the drug index during that period went from 239 to 519.

it has underperformed. it's not like, you know, he's been in the playoffs year after year after year and suddenly they fire him. he was not in the playoffs. he didn't make the playoffs. >> that's true. in an interview that mr. weinberg, who stepped in, he said governance is not just about dealing with difficulties when they're obvious to everyone, it's about anticipating risks in the future. >> wow. okay. >> all right. and up next, it's cramer's mad dash as we count down toward the opening bell. we're awaiting a big announcement from hewlett-packard, holding an event in new york. >> who's on that? >> cramer is on top of that. you'll call in if you have to. more "squawk on the street" from the nyse after this.

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all right. it's about 23 minutes after 9:00. that means seven minutes until the opening bell. time for your mad dash. >> on hump day. one of the things that really distinguished this reporting period was everyone expected the industrials to blow up, so to speak, and it's why you had to be away from all the big companies, because of europe, because of russia. u.s. steel, it's been a long time since we talked about letter "x" marks the spot. they blew in a number last night. it's on flat rolled steel. >> up 56%. >> this management came in and basically said, listen, we're going to scrap all the pie in the sky stuff we've been doing. we're going to take out costs, and we're just going to become a much smaller, leaner, meaner steel company, and it's

succeeding. congratulations to them. it's really good quarter. >> wow. >> they have a lot of cash too. no longer liquidity issues. just a really good story. >> keeps going from here? >> great comeback story. it's not going to go back to 170, 180. if auto, truck build continues, it could do well. it's not an expensive stock. >> let's get to a name we do often talk about. >> here's where people are clustered. gilead is hard to understand because they've got another version coming up. the sales are run believable. here's a good headline. piper jaffray loves it. third quarter, not pretty, but not important either. reiterate overweight. that really is right. it's just not an important quarter with an amazing company that has a fabulous life cure pill that no one seems to be able to really come near yet that i think will have on a salable franchise where they'll be buying back a lot of stock. i would not give up on gilead. >> now, beyond hep c, what else? >> the idea is that they're going to -- this is a little bit

yahoo! like with growth. >> it used to be macular degeneration. >> oh, that was regen. >> the earlier stuff was for hiv. >> they're a remarkable company. they have so much capital you have to figure out how you're going to deploy it. they can do a lot of good things. gilead is the opposite of sanofi. >> the moves on these stocks are so significant at this point. >> this is like sales at ten times earnings. the multiples are always falling behind versus a merck or pfizer where the earnings are coming down. they're ibm-like. that's really the template of how to make your earnings look a little better than they really are, just by shrinking. >> of course, ibm also sold a lot of stuff. >> there's two models for stocks. there's the ibm/merck/pfizer model. then there'sed gilead model and

google, facebook, maybe twitter model. i think the market likes to find the ones that have great growth and discipline in spending. there aren't that many of those. >> all right. we got a lot more stocks to watch. of course, the opening bell four minutes away. stay with us. "squawk on the street" is coming right back. @p

you're watching cnbc's "squawk on the street." we are live from the financial capital of the world. the opening bell will be ringing in about a minute from now. oil, oil, and earnings from whether it's apc or hess. >> good quarter. phillips 66, good quarter. bp, not so hot. you have mixed. everyone thought it was all bad. that was wrong. it's mixed. i think hess really delivered. when your man elliott got involved, that went from being a company people hated to a company people loved. >> that was an example where avtavis succeeded. they've been stronger since.

all right. we're counting down to the opening bell. you can see the real-time exchange back at hq getting itself ready for the open. looks like it's going to be a mixed bag. there is that opening bell for trading on this wednesday. here at the big board, by the way, representatives from blackrock are ringing the opening bell. over at the nasdaq, we have sientra, a medical aesthetics company. that is going public today. hence the balloons and confetti. mostly confetti. i don't see any balloons. >> it's incredible when i look at these oil stocks. everyone just decided they're all at $80, no good. you have companies that have worked to lower their break dramatically using great american companies. they're making much more money per barrel than people realize. you may throw these companies away. believe me, there's someone lurking that wants to buy one of

these. >> continuing to sell assets. your point is an interesting one. consolidation. when names come up about a major acquisition in energy, this has always been one of them at a $46 billion market value. you could imagine it would be quite large. with the retreat in price, one has to wonder whether it becomes more attractive or whether consolidation at least is a possibility within the energy industry becomes more likely. and i think the answer is yes. >> yes. i'm going to bring in qe-2 for a second. the biggest weakness in our economy right now, if you wanted to ask me, is in the high-yield market revolving oil. there's a lot of high-yield bonds and preferreds done by oil companies that are now very stressed at this level. do you wait for some of these other guys to go under and pick at the carcass? that's going to be the issue. exon and chevron, when they report on friday, you're going to hear about production growth.

now that said, anadarko saying, why are you picking on us? these american companies have done great things. everyone's throwing them away because they think they can't make any money at $80 a barrel. that is so wrong. we just need more refinery capacity in this country and they'll make a fortune. or if we can export. have you seen the czar, by the way? >> i have not seen the czar. you're talking about the ebola czar? >> have you seen it? >> no. just checking. >> i think he's in the winter palace. >> i thought you might have seen him. >> he's in the winter palace. >> we have some motorcycles here. >> coming into town. shares of hess are also up 3% this morning as you referred to. of course, all these stocks have come down rather shoarply over the last month. >> they all come down, then we find out who really did -- remember, we want production growth. eog has the best production growth of any of the oil

companies. that's starting to come back. problem is, head and shoulders. it's the head and shoulders patterns. you're going to hear that. the hedge funds, what do they do? they look at the charts, and the charts are bad. >> panera, your old favorite. >> i had the call on panera. why are we buying? very easy to understand. this is a company that's about panera too. we suggested on "mad money" this company was going to get killed when it reported. you had to start buying it. this company on the conference call saying all the right things about 2015. yes, there's some raw-cost dairy, not so good. dairy is coming down. forget about dairy. ask domino's pizza. so i think panera, down here you're going to get a lot of upgrades. and 2015 is going to be the year when panera 2.0 takes over the country, and they're good. no longer in a mosh pit. don't be a dope. >> hershey, not a great response to its quarterly numbers. >> why don't you put out a release that says don't buy me? i'm not kidding.

you should be shorting dean foods if you believe these guys. i think dairy is going to come back next year. grain price being down is good for dairy. >> in front of the biggest day of the year for candy. it's coming up friday. i know your kids aren't little anymore, so you're not as focused on halloween. >> more focused on singles day. >> singles day is november 11th. by the way, talking about alibaba, let's go there. i haven't even taken a look. it's down a little bit. 98.80. >> when you have ten firms come out and recommend a buy and goldman says neutral, are they siding with goldman or are they realizing, you know what, this was the most predictable recommendation series? remember, it's amazon versus ali baa be. one has good revenue growth but not a lot of money. >> incredible margin. right, sorry. amazon, revenue growth and not much else. >> the other is no inventory, fabulous revenue growth, fabulous earnings. >> talk about investments

endleen endle endlessly. amazon is the poster child. they will keep doing it. >> we don't talk enough about what alibaba is doing with its cash. they're investing a lot. they're like also a venture capitalist. they're a one-stop-shop stock. that's throwing money away from a lot of erothers in the group. >> well, with a market cap approaching roughly that of walmart, you can imagine why. we're not talking about a small company by any means. >> what movie will jack think about when this stock goes well above 100? >> "forest gump" from him and "the bodyguard." >> "old yeller"? >> could be. maybe he hasn't seen that one. >> i would bet -- >> "shane"? >> come back, shane. alan lad, right? >> wow. >> oh, yeah. >> only 5'4". >> there you go. got him beat. >> you know, it's never good when the rocket blows up.

i mention that with orbital sciences. that stock is down rather sharply. you want to keep that in mind. when the rocket blows up, not good. >> that won't affect the deal. >> orb shares down over 14%. unmanned. that's why. unmanned rocket exploded a few se seconds after liftoff in virginia. all right. should we get to mr. posani? >> why not? >> let's do that. bob, take it away. >> well, we're being led -- dow is only up 25 points. oil, exploration production, any of the midstream guys, mlps, they're all moving big time right now. i want to note we got two days -- the trader belief is the two days going into the fed are almost always up days. that seems to be true. and we're continuing to repeat that pattern. but this is all about seasonality. everybody's passing around, slicing and dicing the last two months of the year a million different ways. you've seen this before. week before midterm elections, up 75% of the time.

that's been passed around all week here. since 1928 i've seen numbers november and december up over 80% of the time. depends how you slice and dice this. then 25% of the buybacks occur in november and december. my point is, everybody is doing seasonality now as a justification for buying up the market. so you can say, sure, they've got to sell off after the fed announcement because that's what they do. they're up in the two days going in, they sell off. traders are arguing you got to move down then back up immediately on the seasonality play. there's a lot of cross currents going on right now. let me move on to oil because we are starting to get some of the oil companies here. what everybody cares about is what's oil going to be like in q-4 in 2015? that's all anybody cares about. the companies generally are shying away from making those kinds of projections. hess had very good numbers. they said lower realized crude oil prices were the main reason their net income declined. that makes a lot of sense. that's kind of obvious. average selling prices for crude down 8%. they were one of the few people that came out and said this.

from a year ago. that includes the effects of hedging. that's interesting. not many companies have ever separated this out. their prices are down 8%, including the effects of hedging. remember, the big drops were still in this quarter, in this month, rather, in october. so that was a very revealing comment. remember, hess went, what was it, 95 to 75. now it's back to 82 or $83. still not all the way back. most of the companies aren't saying anything about where crude oil is going. phillips 66, they had a great number, a great beat. they were quiet about where oil will be in fourth quarter. generally not commenting here. there's a lot of other companies to report. so far what i see from them, no major changes to capital expenditures. that obviously is going to affect the oil services company. nothing there. everybody seems hopeful oil is going to drift back into the 90s. the consensus price for west texas intermediate right no uh is in the low 90s. we're in the low 80s. so somebody's wrong. but that's why analysts are taking down their numbers for these companies. they think oil is going to stay down here in the low 80s and possibly the 70s.

we'll see who's right about this. by the way, you want indication that things are less worrisome than a while ago? shell midstream partners, this is a big mlp that shell owns. they own pipelines. 40 million shares at 23. holy cow. it was 19 to 21. they own oil pipelines. there was worry this thing was going to be a mess if we had oil continuing to decline. this is a sign of real confidence here and a big sigh of relief for the mlp and oil industry. this is the biggest mlp ipo of the year. we're still waiting for it here. 33 to 36 are the indications now. speaking of ipos, the etf for the ipos, that renaissance capital one, has made a nice comeback. their biggest holding is alibaba. alibaba going to 100 is a big hope to those kinds of companies. finally, david, before i toss to you, marriott's numbers were absolutely incredible. revenue up the%. room rates at 5%. they're getting more people in the rooms, and they're charging

more. this is a fantastic number. marriott, i think this is an historic high for marriott. i believe that is 73.97. finally, eaton did okay, but they talked about things being a little slower over in europe. guys, back to you. >> all right. thanks, bob. >> i have eaton on tonight, i want to point out. this was the first good quarter. stocks up because margin expansion, a lot of different areas. aerospace was really good. getting good numbers. this is finally good. europe's been weak for them for a long time. this is the reason the stock is up, because they didn't blow it. >> we ran the animation for the faber report. i more or less want to talk to you about it today. american realty capital properties. this is one of the disasters du jour. a lot of fear here certainly about a company that says you can no longer rely on our previously issued financial statements. we've also made some changes in our accounting personnel.

this has been a -- you know, under the microscope to a certain extent. the executive chair -- >> was nick shores. >> still is for now. >> right. >> not the ceo. david case the ceo. the key paragraph that's a concern, people, even though they did not restate gap, is that they believe the company incorrectly included certain amounts related to its noncontrolling interest in the calculation of adjusted funds from operations. so-called affo. a non-u.s. gap financial measure. as a result, they say they overstated affo for the periods in question for the three months ending march 31st, 2014. they believe the error was identified but intentionally not corrected. other affo and financial statement errors were intentionally made, resulting in an overstatement again of so-called adjusted funds from operations. one of the key metrics by which this company's progress is

judged. so that is the paragraph that is very much concerning people when it comes to this stock. one has to wonder whether they're going to get more active now. >> red lobster. >> they did the red lobster deal, this company. may remember us mentioning it because they were the buyer, remember, of the real estate. leasing it then back to red lobster. >> when i read that this morning, it was like your heart jumps out of your throat. some of the words in there, the verbiage that they knew and did nothing just reminds you of some of the larger -- >> you always wonder for these cases. people will sell first, ask questions later. the concern there's more to come. they did not change their gap numbers. >> i know. >> but we'll see what happens. >> yeah. >> but this is a pretty widely

held name. we're not talking about a small -- we're talking about a $12 million market cap, at least before today started. now losing 20% of its value. >> you put that well. i've been struggling over how to say it. you just put it much better. >> that was really good. >> i've been saying all morning, how do i bring this one up? as a journalist, you try to figure out -- you just put it right. i don't know how much more there is to be said other than way -- wow. >> all right. we'll head to the bond pits and rick santelli. >> let's throw up an intraday of ten-year note yield. we're moving through a very important zone. yesterday's highs. with the fed meeting and statements, second day of course today, traders are a little trigger happy. so the fact that we're moving above yesterday's high yield is something to pay attention to. if you open the chart up a bit, you know, you'll see that we're

close to three-week highs. first, look at the difference between the two-day of that ten you just looked at here and the two-day of boon. obviously they correlate very well. but today, bit of a difference. not anywhere near challenging yesterday's high yields high on the bunds. let's go back to the ten-year, open the chart up to 10/1. we're welcoming the statement close to three-week highs. and what's more, we can see a lot of discrimination in the yield curve. if you look at an august 1st chart of 5s to 30s, which is a highly played cross trade, spread trade on the yield curve, it's basically been flat. we're basically flat after reaching the flattest level in six years, it is not flattening anymore. it's in a range. this is something to pay attention to because the flattening was a surprise. just like lower yields for 2014 was a surprise. those are correlated. let's look at august 1st charts of the hyg, which is the high-yield etf. you can see that it rebounded so

well from two weeks ago today exactly. that rout of stocks and the drop in yields on the 5th of october. but look at the credit differences. they're both rallying. last chart dollar index since august 1st, after having a big rally, we're also going a bit sideways, but good levels based on where we closed last year. back to you, david. >> thank you, rick santelli. hewlett-packard holding an event in new york city. they're going to have a new ceo. it's a long way away, the split into hp enterprise. that's the head of printing, by the way. >> oh, that's the fella from stanford. smart guy. here's what you need to know. the reason why 3d systems is going down is because they're unveiling a 3d printer that's faster, cheaper, and for corporate coming out almost immediately. they also have a new enhanced

printer. it is very much science fiction. it's science fiction. >> this is their first real entrance into the 3d marketplace. >> yes, it is. and it's going to be a big one. no holds barred. this thing is just very exciting. >> and weisler is going to join you on "mad money" tonight. >> we're going to look at things you can make quickly. it's a game changer. i'm not kidding. it is the game changer in the 3d printing and also in this enhanced printing. >> up next -- >> minority report, david. that's all i need to tell you. >> that movie freaked me out. up next, wings, football, profits with buffalo wild wings ceo sally smith. the franchise looking to maintain sales momentum as it prepares to raise menu prices amid higher chicken wing costs. we'll be right back.

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this week after the company reported better than expected third quarter results. joining us in first on cnbc is buffalo wild wings ceo sally smith. always good to see you. >> good morning, jim. people in community was very concerned about the rising price of wings. but you did something that i think took people's breath away. you were able to took price. you put a 3% increase on your menu, and that pretty much has solved any of the worries about your margins, hasn't it? >> i think it has. that price effect will actually go into effect mid-november when we roll the new menu. and i think we had room to take price. we typically face rising wing prices in the fall. and this year is no different. but we see it being sustained over the first half of the year. so we felt that a price increase at this time was probably the right thing to do. >> yeah. now, let's get to what's really driving things, nfl. you've got more thursday games.

you have fantasy. i was curious to know, do you also have people playing fan duel at buffalo wild wings? >> well, you know, we unveiled a new proprietary game called game break. you request load the app on your phone, android or ios. you can play it on your tablets in restaurant. and it actually -- there are three different games. and we do think that's helping propel sales as well. >> can you give me a sense also about the importance -- i'm trying to build it into my model -- of pizza rev because suddenly here's a business that was a small business in the time since we started talking about this that now 19 stores -- is this going to be a big national rollout? and i'm missing the point that buffalo wild wings is incubating a whole new idea under its roof? >> i think there's a couple things. we look at our investment in emerging brands which now include two. pizza rev out of los angeles and rusty taco out of dallas as a long-term strategy. with the thought that if we

invest now, help them grow, because we've done it before, that gives us the opportunity to have another buffalo wild wings-type concept in our portfolio. we think that both pizza and tacos certainly play to the american public and taste profiles, and we're excited about both brands. >> okay, sally. also, i wanted to ask you, your decision to be able to have this captains, which we talked about a lot of time, you were spending a lot about having captains in the store. it looks like that's now also done. won't that also produce better margins in 2015? >> we have made an investment in labor this last year by rolling the captains. auto we'll have them in all company restaurants by i think the end of this month. and we do believe that we'll start to leverage on labor in 2015. i think that -- and we believe and our analysis shows that having the captains in place really helps create that unique

guest experience, gets the guest to come back in, stay longer and probably spend a little bit more. >> well, it makes all the sense in the world. i see your revenues going higher. that's exactly what i want in a growth stock. thank you so much, sally smith, who is the president and ceo of buffalo wild wings. >> jim, thank you. >> good to talk to you. >> always interesting to hear from her. >> only up 2% this year, so probably has more room. up in ex-stop trading with jim. plus, a big announcement. we've kind of already -- you know, previewed that. big announcement -- >> killed statuses when i mentioned 3-d systems. >> "squawk on the street's" coming right back. being a keen observer of the world has gotten you far, but what if you could see more of what you wanted to know? with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's your idea

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it's time for cramer and "stop trading." >> often they ask me what people do in their spare time. >> i do often ask you that. >> you always accuse me of shopping. >> i don't accuse you. i recognize that you do a lot of shopping. >> ockay, i do. joss & main the other day. the one thing i don't do enough of is play video games. so therefore i'm out of the mainstream. if you look at electronics arts today, ea, this was a struggling company for a long time.

this has got football, it's got soccer. this company reported 73 cents per share. that's looking for about 55 cents. mobile and tablet. mobile and tablet. >> so they are succeeding in making that transition? >> they've made it. now, i remember four or five years ago when i thought that they couldn't, but they really have. facebook has figured it out. google has figured it out. electronic arts has figured it out and twitter not yet making money on it. these guys have figured out mobile. and electronic arts i've got to tell you, this is a very well-run company and very well-run industry. so gaming is so important. you know, i go back to what microsoft said. they didn't do enough. microsoft did not do the kind of call. that stock should be much higher because xbox is often the key to a lot of these things. on mobile, they figured it out. you've got to hand it to some of these managers because that was doubted. people didn't this think that they would be. and the tablet, so unsung because tim cook's numbers weren't so great for the tablet in terms of growth at apple is a

device that's well loved in this country, as will be apple pay. i didn't get to that but walgreens taking share. the paper saying rite aid and cvs is going to win. wrong. >> the battle going on there. by the way, on "mad," you're going to have dion weisley. we have a look now at that 3-d printer. i don't know if we have it -- >> they're going to recreate me. they're going to recreate me. i'm actually not kidding. they are. you can do anything with this stuff. >> there it is. >> and they also have an enhanced printer. speaking of machines that are incredibly cool, i have polaris on tonight, pii. you'll see much of the materials. talking about atvs. and then i've eaton. remember i said first good quarter in a long time. the hp thing -- like i told you, it's very cool. you've got to watch tonight. you've got to watch every night. >> every night. >> right. >> every night. >> every night.

world series, they finish that thing yet? >> game seven. maybe a few people will watch. >> it's like the most important thing in america, american pastime. >> past being the key part of that. >> i like the royals. >> that's kjim cramer. they're still after me. get to the terminal across town. are all the green lights you? no. it's called grid iq. the 4:51 is leaving at 4:51. ♪ they cut the power. it'll fix itself. power's back on. quick thinking traffic lights and self correcting power grids make the world predictable. thrillingly predictable. where the reward was that what if tnew car smelledit card and the freedom of the open road? a card that gave you that "i'm 16 and just got my first car" feeling. presenting the buypower card from capital one.

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♪ are we out of the woods yet a fed decision on interest rates coming in just a few hours. but will there be an end to qe? what to expect. plus, facebook without a lot of friends. today on wall street. shares down sharply after third quarter results. find out what you should be doing with that stock today. and billionaire and real estate mogul rick caruso joins us live here at post 9 for an exclusive interview. the federal reserve set to deliver a decision to interest rates in just a few hours. will it be the end of qe? cnbc senior economics reporter steve liesman has more on what we can expect. the end of an era, steve. >> absolutely, sara. and a pretty good certainty it's going to end. two years and $1.6 trillion later. fed set to end the third round of bond purchases known as quantitative easing.

all of that lost in the wake of the great financial crisis. so the balance sheet standing at $4.4 trillion. that compared to under a trillion dollars before the crisis and the various rounds of quantitative easing. just because qe3 is ending doesn't mean its effects go away. the fed said it's going to hold on to the current balance sheet at least until it starts raise interest rates, and that's not expected until next summer. the fed has purchased trillion dollars of long-term maturities and mortgage-backed securities. now has an average duration of about seven years. it will remain that way while it reinvests for securities that are rolling off. so all that longer duration paper is going to remain off the market. this should continue to make loan rates lower than they otherwise would be if the fed were to sell them. that, in turn, should support the stock market since investors will have to choose between equities and low-yelleding risk-free securities. reinvestments and after rates rise, that's what the fed says in its policy statement. the timing of the ending of the reinvestments or letting the

balance sheet wind down depends on the economic data and there are no plans to sell mortgage-backed securities. now, to be sure, some argue that it's not the stock of assets that the fed owns that has an effect but the monthly buying or the flow. so it's a stock versus flow argument. and we'll get a real test of that now that the fed is not buying any more securities. simon? >> steve, just before we let you go, so the statement comes out at 2:00. this time there's no news conference at 2:30. does that mean we don't get a publication of the dots as to when members think interest rates will go? >> right. you don't get dots until december, simon. that's the next round of forecasts from the federal reserve. and what's interesting about that is that the fed and the market are increasingly far apart. on where the fed believes interest rates will be or the fed fund's rate will be and where the market believes. you saw the fed survey yesterday. almost a percentage point between the two right now. >> okay. we'll pick that point up a little bit later. steve for the moment, thank you very much. let's bring in diane swann,

senior manager with mazero financial and managing director and head of fixed income. ladies, welcome to the program. it's nice to have you here. >> thank you very much. it's nice to be here. >> all right. diane, let me kick off with you. we should remember that through this market turmoil, we have risen about 9% on the s&p 500 from the intraday lows. one of the major reasons, diane, for that is because james bullard suggested that qe would be extended. now, nobody thinks qe is going to be extendeextended, but how handle that? leave it hanging in the air as a possibility, or diane, are they fearful that they may be putting a put under the market which shouldn't be there? >> you know, at this stage of the game, they're hemging their downside which means they leave a crack in the window open to additional qe, if necessary. now, the threshold on that would be extremely high. it is, again, one of their few tools in their toolbox. if something were to fall apart. and of course, since we've had

the last fed meeting, we've had more worries and concerns about low inflation in europe, deflation risks in europe, and low inflation in the united states. the fed welcomes lower prices at the pump. they don't welcome a deceleration in inflation which we also saw political backlash to when those c.o.l.a.s were set for 70 million recipients of everything from disabilities to veteran benefits. it's only 20 bucks a month for them. and for them, inflation is not as low as the overall measures. but, of course, that has gotten some exposure to the low inflation environment as well. >> indeed. margaret, let me pick up the point that we were making with steve, that there's no publication of the dots of when members think that rates are likely to go today because there's no news conference. through the turmoil of the last two or three weeks, what's happened is the market, as steve referred to, has begun to discount, to move back the idea of interest rate rises. initially into 2016, now i think we're at december. now, i think that it's fair comment that that is probably not where the fed is because

they're data dependent. do they correct that today, in your belief, or do they leave it hanging in the air as perhaps a misconception? >> i think they leave it currently in the air. they have moved away from the date-based guidance. and the date-based guidance was pretty much june 2015 for the last two years. and while the market gyrated around that, it becomes more and more important, the changing in pricing of the date as we move closer and closer to the first tightening cycle. so we do think that the fed is on target for june 2015. we still think the risk is that it's later. but ultimately, the pace is really going to be more important. i don't think the fed will give us any guidance with regard to that. it's all about the data. and mid-next year is still quite some time away. we think the market's overpricing probably to the downside risks with regard to inflation, with regard to the liftoff of the cycle. right now, as you said, it's pretty much september and

october for the first liftoff that's priced. it's extremely gradual. the market's pricing 25 basis points every other meeting with a skip in early 2016. we actually don't get the real fed fund's rate up to a zero -- zero real rate until early 2017. and it's 28 months from now. so this is an extraordinarily long period of time until we're -- while the fed is still very, very accommodative. >> right. on this inflation, you guys have been talking about it, diane, what is does the federal reserve do about the too-low inflation and the fact that it's missing its target on 2% prices ridesing? >> it has been missing it for a long time. i mean, i think this is one of the issues we're really going to be see highlighted today as opposed to labor market issues alone. we're worried about inflation being too low again. and this is one of the issues. i think one of the things the fed is worried about hedging against is that it is talking about gradualism. it has said we're going to move gradually. we'd rather go too slow and

overshoot. charlie evans who will be voting next year has really made a point of that. john williams of the san francisco fed has also made a point of that. and the chair herself has made the point that it's worse to have to raise rates and then lower rates again. that would leave the fed sort of bare and with fewer tools than to go too slowly. in fact, let's face it. the fed does not have in its owning if, you know, until very long out, actually 2% its target, let alone any higher which it has argued it should have a little overshooting. >> diane, can i just ask you one quick question? do you think the fed is psychologically damaged by the crisis? we talk a lot about retail investors not coming back into the market. we talk a lot about bankers having too-tight lending conditions particularly on mortgages. to the point they're scared that if they raise rates, they might have to come back to lower rates, is that an irrational terror do you think on their part? >> i don't think it's irrational at all. they've got history behind them. you can hear everyone from ben bernanke who is now a past chair to janet yellen to many within

the fed, charlie evans made a speech about this. history has told us that those central banks who tightened too soon have a lot of consequences that they then cannot deal with after a financial crisis. really critical here. markets are thinking about this being a normal recovery. i think markets have gotten the point now that the fed doesn't think of it as a normal recovery. and the biggest mistake they can make is repeat 1937, repeat the japanese situation or repeat many european missteps more recently, and they don't want to be there. >> okay. six years and counting. thank you very much, diane swann and margaret kerens. tune into "street signs" at 2:00. the end of qe may mean the fed stops buying bonds, but there may be other behind-the-scenes buyers. kayla tausche is here at post 9 with that story. this was a concern about the federal reserve exit. >> to your point you just made, simon, one of the fears is that if you take a big buyer out of the market, then prices of bonds fall, and yields rise a little

bit too soon. but that fear might be a little premature because there is a big group of net buyers stepping into the market. and that's the banks. take a look at the buying activity on behalf of u.s. commercial banks. just since the fed began its taper last december. you can see that chart is going up and to the right in a very decided fashion. banks now hold more than $600 billion in treasuries and agency securities. if you add in mortgage-backed securities, the number is near $2 trillion according to data from the st. louis fed. so why is this happening? you may think they've been taking advantage of this year's unexpected rally in bonds, but in fact, it's actually a consequence of regulation. ironically, the fed passed this year that goes into effect over the next two years. it requires banks to hold enough liquid, easy-to-sell assets to cover 30 days of operations should their balance sheet or the economy get into another bind. treasuries count. so to kmcomply, banks need to stock up on cash and other liquid assets.

mortgage-backed securities, they don't count, so we have seen banks start taper down their positions in those. but for treasuries, just look at what bank of america has done. last year at this time, it had $2.8 billion in treasuries which might sound like a big number, but as of september 30th this year, that was nearly $58 billion. and they're not stopping there. b of a cfo said it would keep buying treasuries as a way to actually manage their interest rate risk. now, roughly, one-third of the fed's buying this month was in that duration the b of a was talking about. though its average duration has been nine years. so at the very least, it means some of these effects of the fed leaving the market should be muted. now, we also have some new regulation coming out of g-20 leaders next month. and that could mean that now international banks start stepping up their bond buying, too. so we have a lot of buying that's going to be happening in the market even with the fed stepping away. >> plus we haven't seen lack of

demand for u.s. treasuries at all. >> not in the least. >> also we should mention they got the bet wrong. they derisked from treasuries in the belief that they would fall. jamie dimon said it. that's where they were, wasn't it? just reversing that risk aversion. >> to a certain extent, yes, they did. they had outsized positions in other so-called safe assets, but now they've realized, look, treasuries are the most beneficial to their balance sheet in the long run, so that's where they're going. >> so it shouldn't be a void. kayla thanks. see you later. up next, facebook falling sharply after warning of rising costs. so what should you be doing with the stock? is it on sale? down 6%. rbc's mark maheney weighs in when we return. g synchrony fina. bringing new meaning to the word, partnership. banking. loyalty. analytics. synchrony financial. engage with us. what if we finally had that would be amazing. hey, what if we took down this wall?

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firing its ceo yesterday over what some have called his solitary management style. according to the company's chairman. this just a day after zeebocker tried to dismiss speculation, essentially pleading for his job. it didn't work. meg tirell has more on the story in new york. >> reporter: hi, david. this was a unanimous decision by the board saying the chairman is going to be the interim ceo. a search for the new ceo is already under way. we're hearing that this was a lot about cultural clashes. some clashes in the management style not being communicative enough with the board. there's been a lot of questions to the company about whether the next ceo will be french because

chris viebacher is canadian and german, not french. some of the cultural clashes, some political issues happening there in terms of an outsider dealing with french culture, some layoffs in france, just sort of an insensitivity potentially to running a french company, kind of a jewel of trance. france. weinberg saying they're not necessarily looking for somebody french. they're just looking for the best executive they can find. analysts downgrading the stock on uncertainty with the management situation, also with their diabetes franchise. weinberg trying to make clear that the strategy is the same. they won't let this interrupt business operation. they're not going to let this be a hiccup for them. clearly a lot of uncertainty about what's going on at sanofi now. >> i was just going to point out, this is also the difference between free markets and capitalism in that you've -- and it's about pricing of diabetes drugs in this country.

you've got a duopoly. if there's only two of you in the market, you should be able to resist that pressure. >> that's an issue being discussed for why he's out. people say that's a systemic issue. that shouldn't be the reason the ceo necessarily gets fired. that's why they're pointing more toward cultural issues. interestingly, it was just a year ago that we saw a similar situation at teva. that's an israeli company and a very important company to israel. with a ceo who was not israeli getting ousted there. similar situations here. >> although, i've heard, and weinberg pushed back on that, meg, a bit saying it was much more performance issues and promises not met from wiebacher than anything to do with whether he was french or not. >> that's what they were saying and that it was a kmaukz issue. i think folks really believe that. there probably were some sort of political clashes going on with personalities, respecting french

culture and that the next person really needs to understand that. >> yeah. never good when you also proposition the board and say you want your job and then try and split them. that's when they kind of come together. >> meg, thank you very much. for the drama at sanofi. meantime, facebook shares are tanking right now, despite an earnings beat and hitting an all-time high this week. the stock now falling almost 6%. it's off the worst levels of the session. when it was down 10%, that weak guide ens spooked investors. ceo mark zuckerberg spoke about facebook's long-term strategy on the call last night. have a listen. >> one thing that i'm particularly pleased about is that while we're investing aggressively and making progress towards our big, long-term goals, we also execute well against our near-term priorities. >> should you be buying? let's bring in managing director at rbc. mark, are you as concerned as other investors are right now about the spending binge that facebook is on? >> no, actually, our concern's

been the opposite. this is the company that's been running very high margins, you know, 50%, 55% ebitda margins. our concern is that they weren't investing enough. so we think they're doing the right thing here. both near term and long term in terms of increasing their level of investments in 2015. these margins should come down. and they've got a lot of interesting growth opportunities. there's video, instagram, facebook app network, ad network, and then finally what's app. they're doing the right thing. we're buyers of this dip for that reason. >> so you're not worried about costs rising as much as 70% next year. you say that's the prudent thing to do. >> yeah. the 50 to 70%. our guess is by the end of the day that that increase in op ex spend next year, 70%, you're talking about spending $3 billion more, i think it's going to be hard for them to hire and spend that quickly. our guess is more 5% and that's what we're assuming in our estimates. >> there were a lot of dazzling

data. mobile continues to be impressive. 66% ad revenue from 49% last year from virtually zero at the 2012 ipo. to me, it can really keep up with these fast-changing market dynamics that a lot of the tech ceos talk about. >> i think you're absolutely right. look, this was the major overhang at the time of the ipo. it took them 12 to 18 months to solve it. they have. this is one of the two best plays on mobile advertising out there in the internet. google being the other one. and just step back. forget the guidance. look at the internal -- look at the trends this company is putting up. 63% yooefr-over-year ad revenue growth. there's no change in the growth here at this company. it's a good, solid business. actually, it's one of the best growth businesses. and they just gave you one of the cleanest quarters we've seen to date in internet land. it's why we like the stock here. >> well, there should be a change in growth, shouldn't there? i mean, just talk me through the valuation that you've got here at 92, mark. it says you've got $92 here. >> yeah. >> on the one hand, we're guessing at whether they're going to employ 4,000 or 5,000

more people next year. you say they'll have difficulty doing that. on the other hand, how can you possibly quantify the step change that that investment will make in future earnings returns? >> oh, you're right. it's a very hard thing to do, unless you have a strong point of view about what the end markets are. we published this report. where we really looked at each of those four new areas that they're going into. auto play, video ads, et cetera. we think as a bucket, that's $3 billion in incremental revenue that can be generated in '15. i don't think op ex is going to grow. then you've got additional growth levers beyond that. i guess that's where the conviction comes from. we know what the end markets are. we think they're appropriately investing against those. >> you joined us on twitter, too, which i know you like. and what stands out is that twitter also came in, wall street expectations. it met. and yet the stock sold off sharply. are the expectations just getting a little too high with these social names, twitter and facebook? >> i will tell you, i'll correct on you one thing. we did downgrade twitter. the metrics are moving in the

wrong direction at twitter. they're moving in the right direction at facebook. the valuation's much more demanding at twitter than it is at facebook. you know, facebook gives you 30% to 40% very likely earnings growth over the next three years. we think the markets should be willing to spend 30, 35 times earnings for that growth, right in line with the pe growth rate. facebook is the best way to play social media. we're not buyers of twitter here. >> so you did not like the quarter twitter put out. finally, 1.35 billion monthly average users. how big can that number get for facebook just when we thought the market was saturated? >> i want to be reasonable. it's still growing year over year. that growth rates' been steadily decelerating. in this case the law of massive numbers. what's key is look at engagement trends. this is different than twitter. you're seeing more and more people use facebook more and more often. the number of monthly users on a daily basis is rising. that's the real positive usage indicator for facebook. it's one of the reasons to buy the stock here.

we're buyers. >> and sellers of twitter. mark mahaney, thanks. rbc capital. up next on the program, how uber and its ceo are transforming road transportation around the globe. and later in the show, billionaire and real estate mogul rick caruso will join us live for an exclusive interview. find out what he's telling the industry today about the state of the economy and how to win in retail. the cnbc realtime market snapshot. if you're up there, i could use some help. smart sarah. seeking guidance. just like with your investments. that sets you apart. it does? it does. you're type e*. and seeking another perspective is what type e*s do.

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(announcer) at scottrade, we share your passion for trading. that's why we give you the edge, with innovative charting and trading features, plus powerful mobile apps so you're always connected, wherever you are. because at scottrade, our passion is to power yours. regular viewers will toe this year marks the 25th anniversary of cnbc. we've been revealing some of the biggest a cons and leaders in the world of business both in the past and for the future. andrew ross sorkin is back at hq with more on that. hi, andrew. >> thank you, simon. one of the people we expect to be talking about in the next 25

years is travis calanick, ceo and founder of uber. of course, the company that is upending the taxi and limousine business. but really creating a new sharing economy and possibly upending many more businesses as well. here's travis in his own words. ♪ >> our motto says it all. we're everyone's private driver. basically a smartphone app. you push a button. in five minutes, town carols up, takes you where you want to go. you can have a really big impact with a really creative idea. but it has to stand out. right? so for us, pushing a button and

a rolls royce ghost coming and picking you up, that's stand out. and people tweet about that. people get excited about that. we're still in the process of finding out how small a community uber will work in. we have gone to cities as small as 90,000 people, and uber does great. as we're moving out to smaller and smaller places, we're going to find out how small we can go. as long as we can get the price pretty low, we might be able to get to communities of 20,000, 30,000 people. any successful business is going to have clones. and that's part of the situation. they keep you honest. they keep you competitive. the last company i did was crazy stressful because i didn't have any money. and i was always trying to make it work. and i like to say i got 100 nos a day for 6 1/2 years straight, which is hundreds of thousands of nos. this is a different kind of stress. and so you have to find ways to

find that center, to find balance and to find sanity because we're getting bigger. and people look at us that way. we have to find that new balance. right now that's stressful. and we're working hard to find it. >> simon, uber already worth $18 billion. but it does have competition in the form of lift and, of course, then there are regulators and regulations. a number of cities trying to keep uber from breaking through. nonetheless, whatever happens to uber, we do imagine that what travis kalanick has done is going to change the face of business one way or another over the next 25 years. >> true disrupter. andrew, thank you. >> thank you. let's get to jackie deangelis with breaking news at the nymex. >> good morning, sara. oil prices continuing to rise after we got a less-than-expected inventory build from the department of energy for weekly crude stocks for last week. the number, 2.1 million barrels. traders were expecting around 4. and we are seeing prices rise, about 92 cents on the day.

traders also telling me there's a lot of technical buy here. we did dip under 80, that got people to get into the market. also spurring short covering there. but a couple of other factors to consider. you did have the opec secretary-general saying not to panic about prices. they are making a push to try to push the u.s. producers to cut supply. and traders think that we may see that in the coming weeks. so the builds we've been seeing may go away. another thing, john kildoff pointing out we did get a decline here in gasoline and also the distillates. so that bearishness is working on the market here and offsetting what we're seeing in crude. pardon me, that bullishness is offsetting the bearishness in crude and sending those prices higher. again, crude right now, $82.35. sara, back to you. >> thanks for those breaking numbers at the nymex, jackie. straight ahead, he is the ceo of one of the largest privately held real estate companies in the united states, owns the famous grove in l.a. and other luxury shopping properties. not to mention he's a billionaire. rick caruso joins us next after the break.

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our next guest has been widely quoted as deeming the model of the traditional mall extinct and certainly has a thing or two to say about the future of retail. retail and real estate mogul billionaire and expert rick caruso, founder and ceo of caruso affiliated, one of the

world's most successful lifestyle developers of residential retail and commercial properties. the grove in l.a. americana here on long island. luxury retail. >> and glendale, california, the americana. >> in glendale as well. what does a mall look like in ten years, rick? >> i think the mall is evolving quickly. it can't stay the way it is today. i mean, i've been very open about the fact that an indoor mall, unless it gets reinvented, i think goes away. you already see that happening. there's a huge move by retailers to the street to open air. they want to be able to connect with their consumers, have a broughter experience. and i think we're going to see a lot of the malls closing up, and there's going to be a reuse of malls. i think it's going to really narrow down. >> the existential threat facing retail with the surge in online shopping. still, 94% of retail sales in this country are brick and mortar. so how do you separate the winners from the losers as this shift evolves? >> first of all, i don't think online shopping is going to hurt brick and mortar. i think brick and mortar is alive and well and it's going to

continue to grow. what you do see happening is online opening stores. and you're going to see more of that. there's going to be a convergence. i think the buzzword in today is hybrid. retail is all about being a hybrid. a car is about being a hybrid. you're going to have great retailers are going to have unique experiential brick-and-mortar stores along with great online sites. >> can you name names of stores, retailers, that you think are doing a good job at bridging this gap? >> you take a look at the grove. we're opening up revolve. it's an incredibly popular online site opening its first brick and mortar at the grove. amazon is opening a brick and mortar right here in new york, right? >> let me drill down the presentation on "women's wear daily." you don't believe that the battle is between e-commerce and bricks and mortar. it's been retailers and merchants. >> i agree. >> it's what you do with that space that wins ultimately. >> precisely. >> talk me through that. >> being a storekeeper, i think all of us have had experience in restaurants or retail where the person knows you, remembers you,

understands what you like and what you don't like. what actually greets you, the store itself has a great experience to it. great retailers are more storekeepers and merchants so there's an experience. a broad example is from early time cavemen liked coming around the fire. there was a sense of community. people still want to do that. i think fundamentally, people like connecting. and retailers that connect will do extremely well. >> my question for you would be whether there's enough talent in retail. or there's enough opportunity for the talent to come through at the store level for that to happen. because a lot of these guys can't -- in apparel can't even find a decent ceo. they keep going back to the one they had before. >> might be tougher to find a decent ceo and salespeople. maybe they should look at their great salespeople to become ceos. you've got restoration, hardware that's reinvented the box. you've got merchants like tory burch. go to the nordstrom at the grove that just got remodeled. the nordstrom family continues

to resolve and reinvent the box. inside the four walls for brick and mortar becomes critically important and powerful. >> it used to be that the mall was a place to provide that sense of community. people would go there in part to shop together and to see their friends conceivably, suburban communities. why are you so negative on the future of that form factor, if you will, for retail, and what will these things become if, in fact, you're right? >> first of all, it's not within human nature to go inside a box and shop. people want sunlight and trees and see people and energy and experience. name an indoor mall anywhere in the world that does more in sales per square foot than a great street in the same city. name a mall in new york that does more per square foot than fifth avenue or madison. >> maybe that columbus circle mall probably does pretty well. it's small. it's very small. >> but it doesn't do as much volume as fifth avenue or madison avenue. there's an energy to it. last night i was at bryant park. people are out. the evening's great. they're on the street. there's a sense of activity and connection.

that's instinctively human nature. that retail connection. >> that's a bigger trend towards urban living. >> it's a box of retail. it's a carnival of retail. there's nothing natural about it. >> isn't there a bigger problem that we see with business at the moment? for years, for decades it's driven for volume. >> right. >> if you look at what's happening with mcdonald's or p&g, they're looking to cut down the offering to customers. >> right. >> and actually, what seems to be winning at the street level is divergence. each retailer wants something different in their store. and the two are clashes horribly. they're going to different directions. >> but the future of retail is back to what it used to be. smaller stores, more curated, a better experience, differentiate yourself. that's where retail's going. not more stores. i don't think more stores mean more sales. i think better stores mean more sales. >> speaking of the future, we just profiled uber as one of the cnbc next 25 disrupters. i understand you have a new partnership when it comes to your malls and uber. >> so this is a good example where we're taking the lead on that customer experience because

the one thing that we all need, that we don't have and can't buy is time. and as a developer, if i can give you back time, i create that emotional connection. that's why we have concierge. uber, you hit the app, we pick you up, you go to the grove or the americana, and we bring you home and you're my guest. i pick up the tab. >> what's the future of rick caruso? you didn't get the dodgers. you didn't get the clippers. is there another sports team you have your eye on? >> i don't know. can i be a regular here? >> yes. >> okay, that's my future. >> you can. >> all right. >> thanks for having me. >> thanks very much. coming up on the program, blackberry announcing the release of the classic for december. "squawk alley" will have an exclusive interview with john chen with the product a little later on. we'll be right back.

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financial noise financial noise take a look at the utilities sector. continuing to move higher. in fact, it's one of the best performing sectors on the s&p so far today. with the dow up 22. let's send it over to dom for more. >> all right, simon.

up by about a quarter percent to far. it's the third best performing sector. if you look at some of the star performers today, pg & e, also american electric power, nrg energy and entergy up from a percent to almost 3% on the trade. it's also worth noting that the dow jones utilities index is near record highs as well on the day. utilities, sara, certainly a sector to focus on especially on a fed day when interest rates are front and center. remember, utilities one of those sectors that's very interest-rate sensitive. with that interest rate sensitivity in mind, let's go to chicago to the cme group, rick santelli with the santelli exchange. >> reporter: thank you and good morning, sara. i'd like to welcome my guest. dr. lacy, thanks for taking the time this morning. >> glad to do it, rick. >> all right, i'm going to ask you a simple question first. given the information we currently know today, do you think the fed will raise rates in 2015? >> no, i don't.

>> we have a lot of company in that camp, i guess. all right. now, considering that i've seen three economists on our channel, i'm talking good economists that have great respect for, but withdraw names. talking about thank goodness, you though, with the bumps in the economic growth we've had the last several years, good thing the fed didn't raise rates because oh, my gosh, they might have had to lower them again! dr. lacy, what is wrong -- they're not really data dependent, then, if we make those statements. they're weak data dependent. what's wrong with the symmetric approach where you move subtle changes in monetary policy based on overnight lending rates up and down depending on the data? what's the matter with that? >> well, basically, there's nothing wrong with it. as a matter of fact, one of the problems with monetary policy is that the fed, by its past policy errors, has basically put themselves out of business.

they allowed a massive buildup in private debt to occur over the last 20 years. they've spawned this buy now, pay later approach of the american consumer. but there becomes a point when the pay later overwhelms the buy now. and when that happens, monetary policy is basically ineffective. the federal reserve can make statements. they can hold press conferences. they can do this and that. but monetary policy is almost impotent. there's nothing they can do -- >> i'm going to make a statement, dr. lacy. you tell me why it is or isn't correct. the 2014 fiscal budget deficit is going to only be about a half trillion dollars. so we're on the right path. is that an accurate statement? >> no, we're not on the right path. we're going to have -- the numbers that you cited for this year, that's correct. but the problem is that we have

very adverse demographics over the next 12 to 14 years. and as the demands and requirements to make social security and medicare payments and even payments under the affordable care act begin to mount as aging baby boomers retire, the federal debt is going to move significantly higher. we're very ill-prepared for what the future is going to bring. >> last question. when it comes to what's going on in the indebtedness as a function of gdp, you've recently called it debt sclerosis. in the last 15 seconds, summarize why debt sclerosis is something we need to worry about. >> well, debt is an increase in current spending in lieu of a decline in future spending. and the fact of the matter is, the entire world is now very heavily leveraged. in 2008, in the years leading up to 2008, the debt increase was in the advanced economies particular to the united states. none of them have deleveraged to

any significant degree. and since 2008, we've had a massive leveraging in china and the emerging economies, and for you the wornow the world is significantly more leveraged than 2008, significantly more leveraged at any time in our future, and that points to weak growth, low inflation. >> thank you very much for taking the time this fed day morning. thanks again. simon, it's all yours. >> thank you very much, rick. big day on cnbc. up next on the program, a wave of analysts initiating coverage on alibaba this morning. we'll talk to one who calls the stock a buy after this break.

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just want to mention a couple big movers this morning. one down, one up. starting with the blood bath. arcp. triple net lease. had a $12 million market value. not anymore. losing 26% after the company said do not rely on our previously issued financial statements and talks about intentionally but not corrected errors the company has found.

fiat chrysler, the company spans to spin off ferrari. 10% sold to the public. 90% distributed to shareholders. got back to phil. hard to say exactly what the value is but probably call it around 6 billion. >> question, do you think they are trying to smoke out a trade buyer for 6 or 7 billion dollars to make a capital increase for the group overall less likely? >> i don't know the answer. another company stepping in and buying the entire thing. >> absolutely. look at the cash gm is sitting on. they could buy it like that. >> several phones initiating coverage of alibaba. a number rating the chinese e-commerce giant. let's bring in ken. why is it a buy? and why a target. >> alibaba's business has a lot of structural advantages that remind us a lot of google, amazon, paypal.

and on the enterprise side. when you look at the china. it's a big opportunity rising incomes. but i also think there is opportunity within china seeing greater broad band connectivity in lower tier cities and mobile predominate. >> interesting. what about the international opportunity. jack ma is off to hollywood to broker deals. what do you think they will do here? >> i think when you think about what they represent they are very much about efficient connection between buyer and seller. if you were a seller of content and looking for an audience, i think what they are building there in terms of integration and data they have, i think it does leverage well into other vertic verticals. content is one. and there is a natural connection between content and commerce and we see that here. i think for them it is still early to view that as their bigger opportunity. but if you think about where they stand in terms of building

a efficient marketing channel for their sellers and ultimately helping them even manage their supply change it is something you don't see in the west very often. >> you are not alone by the way. even if you are impressed by the numbers and valuation metrics just how big and profit blg this company is. what do you tell an american investor that is spooked by the lack of transparency on regulatory risk and markets in china? >> there is certainly a protectionist layer in terms of foreign ownership of alibaba. but think i there is also a protectionist interest around competitive hainterest as well. which i think can benefit. they off set one another somewhat. i think investors should be at least aware there is an outer layer of separated control. and you do get that to some extent even with the internet companies here. so i i don't think they are

competely new to that concept. but again when you look at the ability for other competitors to come into china to challenge them, whether a amazon or google or other i think alibaba benefits from that. >> it was a busy night because facebook also came out. talk me through where you are on that. we had mark muhaney and he was as bullish as ever. how do you feel. >> i think it came a little earlier than expecting as well as a little outsized versus what we were expecting. but when you think about what they are investing in particularly on the ad tech side. they really are moving i think the industry forward in way investors should be excited about. and i think particularly when you think about that higher op ex number they gave for 2015, assuming they are successful and handle a lot of the data

complexity issues that advertisers are having to deal with and they roll out better formats and so forth, well, they are likely to place those ads on third party sites too. not just facebook but partner sights and that would drive higher acquisition costs and push them toward the higher owned it have guidance but at the same time gave them a big revenue opportunity. >> ken nice to see you. >> take care. >> over to jon fortt with a look at what's coming up next on "squawk alley" lee. jon. >> a big show coming up. blackberry ceo john chen. we're going to cover why the blackberry classic won't be another fire phone. and finally the google wallet creator and the future of payments. ng. ng. getting in a groove. growth is gratifying.

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welcome to "squawk alley" on this wednesday morning. joining us, larry chang. one of the first venture capitalists to talk with mark zuckerberg in the early days of facebook. lance, good to have you here. we have to start with facebook and i want to start with the head line from the "new york times" in just a second. but shares have been selling off today despite